Jagat Narayan, J.
1. These are connected applications under Section 66(2) of the Income-tax Act (hereinafter called the Act) by Messrs. Chaturbhuj Chhogaial of Beawar against the Commissioner of Income-tax and Excess Profits Tax.
2. The facts which have given rise to these applications are these. A Hindu undivided family carried on business under the name Chaturbhuj Chhogaial at Bcawar, The main business was the purchase and export of wool. Jagannath was the manager of the joint family firm. A disruption of the joint family took place in the year relevant to the assessment year 1944-45. Thereafter the same business was carried on by the divided members of the family in partnership under the same firm name, the partners being Jagannath, Harnarayan and Rammivas. The case of the assessee was that for purposes of financing the business, short term deposits were accepted. During the accounting year relevant to the assessment year 1944-45, total deposits amounting to Rs. 338000/- were taken according to the account-books. The Income-tax Officer was not satisfied about the genuineness of two items out of these deposits--one of Rs. 11,000/-and the other of Rs. 10,000/-. In the books of the assessee they appeared as deposits in the names of Kishanlal Bikania and Shrimati Kasturibai respectively. The Income-Tax Officer called upon the assessee to prove the genuineness of these two items under Section 23(3) of the Act. Apart from these two items, the assessee was also called upon to explain the nature of an account headed Radhakishan Satyanarain. It may be mentioned that Radha-kishan and Satyanarain are the sons of Jagannath. In his statement made before the Income-tax Officer on 8th February, 1947 in this connection, Jagannath alleged that Satyanarain was, to the best of his knowledge, connected with one Bhagirath of Bikaner who managed the business styled as Radhakishan Satyanarain. When he was confronted with certain facts, which had been elicited by the Income-tax Officer from independent enquiries, Jagannath had to admit that he had made a false statement with regard to the account in the name of Radha Kishan Satyanarain. The Income-tax Officer did not accept the genuineness of the above two items which appeared as short term deposits and took them to be concealed income from undisclosed business source. Income-tax as well as excess profits tax was assessed on these items. Against this assessment, an appeal was preferred to the Appellate Assistant Commissioner of Income-tax which was dismissed. The assessee then appealed to the Income-tax Appellate Tribunal which dismissed the appeal with regard to the item of Rs. 11,000/- but allowed it with regard to the item of Rs. 10,000/-. Both Income-tax and excess profits tax became leviable on the sum of Rs. 11,000/- as a result of this decision. The assessee filed an application under Section 60 (1) before the Tribunal with regard to the excess profits tax only. The Tribunal held that no question of law arose out of their order. Civil Mis-cellaneous. Income-tax Appplication No. 43 of 1957 has been preferred under Section 66(2) with regard to this matter. During the accounting the accounting year relevant to the assessment year 1945-46, total deposits amounting to RS. 6,20,400/- appeared in the ac-count-books of the assessee. The Income-tax Officer was not satisfied about the genuineness of thefollowing five deposits aggregating to Rs. 1,09,200/-..
(1) Shivratan Girdharilal of Bikaner .. Rs. 37,000-
(2) Tarachand Manmal of Bikaner .. Rs. 21,000/-(S) Badrilal Chunnilal of Sandaur .. Rs. 24,000/-
(4) Bhagirath Kedarmal, Valora ... Rs. 10,000/-
(5) Mohanlal Radhakishan of Lambiya... Rs. 17,200/-.
3. The Income-tax Officer accordingly asked the assessee to prove the genuineness of the above items under Section 23(3). Four affidavits were filed on behalf of the assessee after repeated opportunities had been given to him to adduce evidence. They were the affidavits of Manmal son of Tarachand, Girdharilal son of Chaturbhuj, Bhagirath son ofr Kistoorchand and Mohanlal son of Harlal. Uncertified copies of these affidavits were produced before-us. Manmal, Mohanlal and Bhagirath neither stated that they maintained account-books nor filed any copies from them. Only Cirdharilal stated that he maintained account-books and filed a copy of the Khata of the firm Chaturbhuj Chhogaial of Beawar appearing in his account-book. The persons who had filed affidavits were not produced before the Income-fax Officer for cross-examination. In a letter addressed to the Income-tax Officer, it was slated on behalf of the assessee that some of these deposits were made by the depositors on the recommendation of one Badridas Tiwari of Bcawar. This Badridas was also not produced on behalf of the assessee before the Income-tax Officer. All the alleged depositors were residents of outside places. The assessee did not produce any correspondence relating to the deposits which might have taken place with the depositors either prior to the deposits or subsequent to them. Another circumstance, which appeared to the Income-tax authorities to be suspicious, was that no transaction had ever taken place between the assessee and these alleged depositors prior to these deposits. No collateral document was executed in respect of the deposits. The assessee told the Income-tax Officer that the depositors were not willing to appear before him.
Further, no interest was paid to the depositors when the principal amounts were returned. Interest was paid to some of them in the next year and to others in the year after the next year. Some items of interest were alleged to have been paid in the shape of 'Hundis' after the Income-tax Officer had called for proof. Taking all these circumstances into consideration, the Income-tax Officer held that the deposits were not genuine and were concealed' income from undisclosed business sources.
The assessee preferred an appeal to the Appellate Assistant Commissioner of Income-tax who agreed with the Income-tax Officer and dismissed it. He has given adequate reasons in support of his finding in his order dated 31-10-1.949. He was of the opinion that the amounts involved being very substantial, they could only be earned from business. He accordingly upheld the order assessing the aggregate amount to excess profits tax also.
The assessee then appealed to the Income-tax Appellate Tribunal which dismissed both the appeals relating to income-tax and excess profits tax. The assessee then filed applications under Section 66(1) before the Tribunal which were rejected on the around that no question of law arose out of their order. Civil Miscellaneous Application No. 44 of 957 arises out of the order of the Tribunal relating to income-tax and. Civil Miscellaneous Application No. 43 of 1057 arises out of their order relating to excess profits tax.
3a. We have heard the learned counsel for the assessee and the Income-tax Department and weare satisfied that the order of the Tribunal in these cases is not vitiated by any error of law.
4. It was asserted on behalf of the assessee that an application was made to the Income-tax Officer for issuing commission for the examination of the depositors. This assertion is not correct. The Income-tax Officer was never asked to issue a commission for the examination of these persons. On the date on which the assessment was being completed by the Income-tax Officer, the assessee filed an application in which it was said,
'We shall have no objection if a commission is issued to cross-examine these persons and we shall be willing to pay all expenses thereof'.
The assessee failed to produce Badridas Tiwari on whose recommendation, it was alleged, some of these deposits were made. Badriclas was a resident of Beawar and if an application had been made to the Income-tax Officer, process could have been issued to enforce his attendance. The assessee can have no grievance against the Income-tax authorities on these scores.
5. The main grievance of the assessee is that the Income-tax Appellate Tribunal was unduly influenced by a false statement which had been made by Jagannath in connection with the deposits appearing in the accounts of the year relevant to the assessment year 1944-45, while considering the deposits relevant to the assessment year 1945-46. We have carefully gone through the order of the Tribunal.
Ten appeals were decided by the Tribunal by this order. When dealing with the accounts relevant to the assessment year 1945-46, the Tribunal undoubtedly observed.
'We have gone into the affidavits which are on record and have heard the appellant at length about the needs of the business and we cannot ignore the false statements that were made by Jagannath while explaining certain amounts in connection with the immediately preceding year's assessment. The impression that has been left on our minds is that the alleged creditors in all these cases are mere namelenders.'
But they were not unduly influenced by the false statement which Jagannath had made, even while dealing with the accounts relevant to the assessment year 1944-45 in connection with which that statement was made. They considered the two disputed deposits of Rs. 11,000/- and Rs. 10,000/-relating to that year 'on merits. They believed the assessee's version with regard to the item of Rs. 10,000/- and allowed the appeal.
As is clear from the observation quoted above, the Tribunal were fully alive to the fact that Jagan-nath's false statement related to the preceding assessment year. Jagannath, however, continued to be a partner of the firm during the year relevant to the assessment year 1945-46. They were thus entitled to take into consideration the fact that one of the partners was not a reliable person.
But the order of the Tribunal shows that they considered the other facts and circumstances which were on record and their order is based n those facts and circumstances. From those facts and circumstances, which have been referred to above in brief, they could have reasonably inferred that the above alleged deports were not genuine and were concealed income. Further, the assessee is a business firm and apart from carrying on business in wool, it carries on other kinds of businesses as well including speculation.
The inference was accordingly irresistible thatthe concealed income was from business sources, Although the Tribunal did not say so specifically, the Appellate Assistant Commissioner had stated is his order that the amounts involved were substantial and such substantial amounts were clearly relat-able to business activities of the assessee and excess profits tax was payable on them.
As the Tribunal dismissed the appeal,, they will be deemed to have agreed with the reasoning given by the Appellate Assistant Commissioner in his order for treating the undisclosed income as income from business sources.
6. It was argued on behalf of the assessee that the Income-tax Officer and the Appellate Assistant Commissioner of Income-tax wrongly put this burden on the assessee to show the source or nature or the amount of the cash credit and although the Tribunal did not say so specifically, it proceeded on the assumption that the burden lay on the assessee. A decision of the Patna High Court in Radhakrishna Behari Lal v. Commr. of Income-tax, B. and Order : 26ITR344(Patna) , was relied upon, in which it was held;
'If the cash credit stands in the assessee's name the burden of proof is upon the assessee to show that the item of receipt is not of an income nature ................ But the position is different in regard to a sum which is shown in the assessee's books in the name of a third party. In such a case the onus of proof is not upon the assessee to show the source or nature of the amount of the cash credit; on the other hand, the onus shifts to the Department to show by some material that the amount standing in the name of the third party does not belong to that third party but belongs to the assessee.'
7. On behalf of the Income-tax Department, three cases were cited in reply.
8. In Mahabir Prasad v. Commr. of Income-tax : 15ITR393(All) , the Allahabad High Court held with regard to a credit entry standing in the name of II, a third party that the Income-tax Officer could require the assessee to prove that the entry represented a genuine credit in favour of H, and that if the assessee gives am explanation which is false or unbelievable, there is nothing in law to prevent the Income-tax Officer or the appellate authority from inferring that the receipt evidenced by the credit entry is a revenue receipt. It was observed:
'In each case it would be a question of fact and the answer must, in every case, depend on the finding whether the inference is a reasonable inference from the assessee's failure to prove his case. There is nothing in law to prevent an inference that a particular receipt is a revenue receipt, provided that that is a reasonable inference and the assessee fails to satisfy the Income-tax Officer or the appellate authority as to the source from which the money came.'
9. In G. M. Madappa v. Commr. of Income-tux, Madras : 16ITR385(Mad) the Madras High Court held that where an asses-see has failed to prove positively the source and nature of certain amounts of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an income nature and that the burden of proving that they are of such a nature will not be on the Income-tax Officer, merely because he had failed to notice similar unexplained cash receipts in the accounts of earlier years.
10. In Raghava Reddi v. Commr. of Income-tax, Madras : 29ITR942(AP) , the Andhra High Court held that the question of burden of proof cannot be made to depend exclusively upon the fact of a credit entryon the name of the assessee or in the name of a shird party, and that in either case, the burden lies the assessee to explain the credit entry, though the onus might shift to the Income-tax Officer certain circumstances.
11. The case of : 26ITR344(Patna) , was referred to Reference was also made to a subsequent decision of the Patna High Court in M. L. Tewary v. Commr. of Income-tax, B. and O. : 27ITR630(Patna) , in which it was observed:
'In the approach to this question it should be remembered that the onus is upon the assessee to prove positively the source and nature of the money which was received during the accounting year. In the absence of any explanation of the assessee the revenue authorities are entitled to draw the inference that the receipt is of an income nature.'
12. We are in respectful agreement with the view taken by the Allahabad High Court in AIR 1947 All 414. The Income-tax Officer can require the assessee to prove that an entry appearing in this accounts represents a genuine credit. This power is given to him under Section 23 (3). If the assessee gives an explanation which is false or un-believable, it is open to the Income-tax Officer to enter that the receipt evidenced by the credit entry as a revenue receipt.
The question is one of fact and the answer must depend on the finding whether the inference drawn by the Income-tax Officer is a reasonable inference From the assessee's failure to prove hiscase. Judged in this light, the reasons given by the Income-tax Officer, the Appellate Assistant Com-commissioner of Income-tax and the Income-tax Tribunal are, In our opinion, sufficient for the purpose of drawing a reasonable inference that the disputed credit entries do not represent genuine credits, but represent income from an undisclosed business source. It cannot, therefore, be said that the order of the Tribunal in these cases is vitiated by an error
13. We accordingly dismiss the applications with costs.